Kevin McCarthy, Joe Biden Have a Mutual Problem

The White House and the Republican-led House of Representatives remain at a stalemate over a deal to pass a federal budget, leaving both sides in a challenging position ahead of a crucial deadline to fund the government.

For weeks, Biden and House Speaker Kevin McCarthy have been embroiled in negotiations over the budget, with Biden seeking an increase in the amount of debt the United States is allowed to carry in order to fund a number of his party's preferred domestic programs as well as military spending necessary to improve U.S. military readiness in the South Pacific and maintain necessary levels of aid to Ukraine.

McCarthy, meanwhile, has sought to impose broad-based spending reductions across the federal government which Biden recently described as "wacko." Both sides are now on a collision course toward insolvency not experienced since a similar fight between former President Barack Obama and a Republican-led Congress in 2011.

The United States has always had debts, with the federal deficit continually rising through the administrations of both parties. Battles over the budget are also new; to date, the federal government has adopted a budget resolution before the April 15 deadline just four times over the last four decades.

The stakes of the current negotiations, however, are considerably higher.

While the debt ceiling has long been a bargaining chip for both parties to exact their preferred policies, some members of Congress have refused to budge on any debt ceiling increase and ultimately default on that debt, a move that could have a detrimental impact on U.S. citizens.

At the week's start, U.S. Treasury Secretary Janet Yellen wrote Republican House Speaker Kevin McCarthy claiming the Treasury Department would likely be rendered unable to satisfy all of the government's financial obligations if Congress fails to raise or suspend the debt limit by as early as June 1, potentially putting U.S. consumers at risk.

"We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," Yellen wrote.

"If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests," she said.

McCarthy, meanwhile, has Biden where he wants him.

While some Democratic members of Congress have encouraged Biden to invoke his presidential authority under the 14th Amendment of the U.S. Constitution (dictating "the validity of the public debt of the United States...shall not be questioned.") such a solution would almost immediately invoke a lawsuit, and would likely face a decision by a conservative majority in the U.S. Supreme Court.

Yellen herself recently described the approach as "legally questionable."

Newsweek reached out to the White House Press Office via email for comment.

House Democrats, meanwhile, have begun advancing a discharge petition to force a vote on a debt ceiling increase. However, that's a move that would require five Republicans to defect, thereby abandoning McCarthy and House leadership's priorities. And while the specific terms of negotiations have been vague, Republicans have made progress.

On Wednesday, Punchbowl News' Jake Sherman reported McCarthy had outlined work requirements for certain social safety net programs as a "red line" for Republicans in the debt ceiling discussions, drawing speculation Biden—who, as a senator, once supported them—could potentially concede on a point that has traditionally been anathema to Democrats.

Speaking to reporters at the White House later that day, Biden signaled he would not budge on work requirements for healthcare programs like Medicaid, but could potentially be willing to concede on others.

"I'm not going to accept any work requirements that go much beyond what is already [there]," he said, though there were "a few others" he could accept, which many observers took as a reference to programs like the federal Temporary Assistance for Needy Families program (TANF).

Critics say work requirements could potentially have major implications for some of the country's most needy and vulnerable populations. Historically, work requirements—similar to those Biden supported as a member of Congress in the 1990s—have also proven to have negligible impacts on addressing the fiscal burden on those programs, and could harm those who need it most.

One study in Arkansas—a state with highly restrictive work requirements for Medicaid—found 95 percent of those who lost their benefits were eligible for the program but were unable to get past the administrative burdens required to prove they were working or seeking employment. Others have argued there are already strong incentives to work, with welfare reforms passed in recent decades including language increasing the value of programs like the Earned Income Tax Credit and the Child Tax Credit, which requires recipients to report earned income on their tax return to qualify.

"Want better labor force participation? Invest in human capital," Don Moynihan, a policy professor at Georgetown University's McCourt School wrote in a recent blog post criticizing work requirements in the ongoing budget talks. "Giving families basics like food and health coverage moves them from a place of scarcity, making them more likely to be prosperous in the long-run."

Politically, however, there appears to be some room to move on work requirements, which remain widely popular. Recent polling has shown most Americans—including 49 percent of Democrats—support work requirements for social spending programs while other members of the party, like California Democrat Jared Golden, have criticized Biden for not coming to the table sooner.

"I've been disappointed with the way [the Biden administration] has handled it up until the last week essentially, writing a letter to the president on February 1, saying we need to negotiate," Golden said Wednesday.

Conservatives, meanwhile, have argued there needs to be a tightening of social safety net programs, which they claim no longer resemble those Biden once supported.

"Work/training requirements are necessary because the current income support system is poorly designed and is rife with disincentives," Wayne Winegarden, an economics fellow at the conservative Pacific Research Institute, which has advocated in favor of work requirements, told Newsweek. "There is clearly a need for work/training requirements to ensure that the programs serve as temporary assistance for people who have fallen on difficult times, rather than long-term subsidies."

Conceding on those fronts, however, could cost Biden the support of progressives within his party, who have warned of significant pushback from their conference if the White House makes any concessions on social programs.

Earlier this week, Congressional Progressive Caucus chairwoman Representative Pramila Jayapal told Axios it's "really important that we don't give ground" on issues like welfare work requirements and energy permitting reform in the budget. Others, like New York Congresswoman Alexandria Ocasio-Cortez, suggested any capitulation to Republicans "threatens to weaken the president" and embolden Republicans heading into a presidential election year.

McCarthy, however, has remained firm. On Thursday morning, the House majority and a Republican minority in the U.S. Senate held a bicameral press conference on the Capitol steps in a show of unity over the debt limit, calling for the government to reduce the federal debt at a sharper rate than the White House has claimed its budget anticipates.

"Our debt is larger than our economy by more than 20 percent," McCarthy said Thursday. "If we do nothing, we will pay more in interest in the next ten years than we paid in the last 83. If we do nothing and we follow along, then god forbid you get a Biden default because he ignores the problem just as he's ignored the border."

Update 05/18/23, 1:15 p.m. ET: This article was updated with comment from Wayne Winegarden.